The Empirical Study Of Cash Holdings Affecting Corporate Performance Of Listed Companies In China Under Different Market

Cash is an essential part of company assets,cash can not only meet the needs of the company day-to-day transactions and business activities,but also to ensure timely and fully grasp the unexpected opportunities,also can avoid the company in the risk of sudden losses due to shortage of cash.Therefore,the company’s cash holdings level decision-making have very important influence on corporate performance.At present,China’s capital market is developing rapidly,stock market impact on listed companies is becoming more and more deeply,different levels of cash holdings will affect the operator’s investment behavior,may also affect the external investor confidence in the company.Under such a background,learning about cash levels under different market’s impact on corporate performance is conducive to China’s listed companies to make better decisions for companies in the changeable environment scientifically.Current domestic research on the influence of the cash holdings concentrated more in the perspective of corporate governance factors and industry factors.Few research studies from the perspective of the capital market,learning the impact of cash holdings under different stock market.Based on the summary of relevant theories and induction of predecessors’ research results,this paper divide 2007 to 2015 into 5 a bull market and 4 a bear market according to the Shanghai composite index closing price data,respectively analyze cash holding level and corporate performance of 383 A-share manufacturing listed companies in bull market and bear market,validate the relevant relationship of the level and deviation of cash holding and corporate performance in different level of the stock market.This paper uses the ratio of cash and cash equivalents to total assets as a measure of corporate cash holding level,calculate the comprehensive index of return on assets,return on equity and earnings per share as a measure of corporate performance.The result shows that the level of cash holdings in a bull market and bear market positive correlation with corporate performance,and the positive correlation of bear market is to a greater extent than the bull market.Excess cash holdings and cash holdings total deviation both have positive correlation with corporate performance,and the positive correlation of bear market is to a greater extent than the bull market.Lack of cash holdings and corporate performance is negatively related,and the negative correlation of bear market is to a greater extent than the bull market.Cash levels and deviate from the impact on corporate performance related to the stock market cycle and sentiment.When making cash holdings decisions of listed companies,should fully consider the influence of stock market cycle and investment sentiment and make the most advantageous decision of company performance.